Special-events fees and the mayoral hopeful’s wife

Katherine Stuart Faulconer has stake in negotiated city fees, pushed against invoice, emails show

Whether the city should impose a so-called “linkage fee” on new commercial development to subsidize low-income housing has been at the top of the list of controversies dominating the race for mayor between Kevin Faulconer and David Alvarez.

The split has generally been along party lines, with city-council Democrats, including Alvarez, backing the fee and Republicans, including Faulconer, opposing it as what he calls a "jobs tax."

The fate of that municipal levy is just one of many possible fees that could confront whoever prevails in next week's election, one of which could also impact the job of Faulconer’s wife.

So-called negotiated revenue fees, levied on corporate events that hold block parties on city streets, have been intertwined with the lucrative consulting business of Katherine Stuart Faulconer, who has long been the go-to person for setting up corporate block parties in downtown's Gaslamp Quarter.

Stuart runs Restaurant Events, Inc., which, according to her husband’s financial disclosure report, filed September 18 of last year, is worth between $100,000 and $1,000,000.

Faulconer's disclosure says the business has a gross income of over $100,000, though it is not clear from the report what period that covered.

Single sources of income greater than $10,000 to Stuart’s company have been the Cohn Restaurant Group, Dick's Last Resort, and Acqua 2, the disclosure says.

"Restaurant Events, Inc.," says the company's website, "was founded in 1996 to fill a very unique niche between the independent Restaurateurs of San Diego’s Gaslamp Quarter and the booming meetings industry."

A Restaurant Events specialty is helping coordinate large corporate block parties held in conjunction with conventions. A testimonial of Janice Krieger, identified as an event producer for the Biotechnology Industry Association, is listed among others on the company's website.

"Well, BIO '08 is over and wrapped up, and I want to thank you for your tremendous assistance in making our Gaslamp Street Party a resounding success! Without a doubt, you know how to make this happen!"

In order to close streets in the Gaslamp and elsewhere for block parties, applicants must obtain the approval of the city’s office of special events.

Led by director Carolyn Wormser, the office quietly negotiates the terms of downtown permits with event sponsors and a small group of local consultants, who earn a major part of their living by knowing the ins and outs of the city's obscure and undocumented "negotiated revenue" process.

Special-events office documents obtained by a request made under the state's public records act show that so-called negotiated fees for street closings since 2011 have ranged broadly, including those for "NAA Corporate Block Party" last June, $15,000; "Qualcomm Q on the Fifth," June 2012, $21,000; "Cisco Block Party," April 2012, $6000; "Solidworks World 2012 Special Event," February 2012, $15,000; and "Qualcomm Q Fest Street Scene in the Gaslamp," June 2011, $12,000.

Some corporate block parties haven't paid a negotiated fee at all, the documents show, including the "SLAS Corporate Block Party" in February 2012 and the "F5 Corporate Block Party," in November of last year.

An explanation for the wide range of revenue for the corporate events and details regarding how and when fee negotiations are conducted was not provided by the records furnished by the city.

Emails between Stuart and the city's events office show that the issue of who is charged what has been a matter of contention, with at least one five-figure fee waiver granted following multiple emails over two months sent to city officials by Stuart.

In December 22, 2009, according to the records, the city councilman's wife sent an email to city special-events staffer Cindy Benitez-Kodama requesting that the office waive the city's fee for a May 2009 corporate block party sponsored by the American Thoracic Society.

"For some reason the invoice for ATS was never settled. Can you please let Ms. Damon-Sanchez know that the invoice 13705036 has been waived for the $9,000 plus interest?"

A week later, on December 29, with the bill still outstanding, Stuart again emailed Benitez-Kodama and her associate Kathy Damon-Sanchez, asking, "Are we good here?"

Responded Stuart: “Please let me know what the process is for fixing this ASAP. Thanks.”

On January 5, 2010, Stuart again emailed Benitez-Kodama: "Can you please give me an update on this. I am obviously very concerned about have [sic] something in collections."

On January 6, Benitez-Kodama responded: "I did request that the invoice be voided." Replied Stuart: "Great — Thanks."

Wormser declined to respond to multiple phone messages left with her office regarding the city's fee-waiving policies.

Finally reached by phone at her residence, she said she would answer all questions the next business day but subsequently referred inquiries regarding the fees to Katie Keach, communications chief for the office of interim mayor Todd Gloria.

In an email, Keach said that the mayor's office and city council have given Wormser complete authority to negotiate the city's street closing and corporate block party fees with for-profit sponsors and their local representatives, including Stuart.

There is no schedule of negotiated fees, which leaves the ultimate decision on whether to levy fees and their amounts totally up to Wormser, Keach said.

"The Special Events Administrator is responsible for fee negotiations and communicates directly with the event organizer," according to Keach.

"The discretionary fee is negotiable. Although event organizers have historically paid similar negotiated amounts, there are not set amounts...no formal written document or policy providing guidance on the negotiations exist[s]."

According to a subsequent email, Keach indicated that Stuart obtained the $10,000 fee waiver for the 2009 American Thoracic Society’s Gaslamp Party because the 15,000 member physicians’ association, which grosses millions of dollars of revenue from its annual convention, according to published reports, is technically a nonprofit organization.

Keach said that as a result of a citywide fee review ordered by the administration of mayor Bob Filner, the city is not currently collecting any negotiated revenue for street closings and corporate block parties, potentially costing city taxpayers millions of dollars in lost income.

Comments

Seems like such a simple solution, if they wanted to solve it. If Wormser has "complete authority" she must use "something" in her head, as a guide. A standardized fee schedule seems like a no brainer. Clearly it would protect taxpayers and save time on part of city-paid staff. Problem is, the event planning companies (and their clients) likely are not motivated to resolve it. And it seems as though Wormser is not motivated either, since it could be so easily memorialized in a quick memo.

Can I be reading this right? According to the office of Interim Mayor Todd Gloria, the city is not presently collecting revenues for street-closings and corporate conventioneers' block parties just because ex-Mayor Filner ordered (what sounds like) a much-needed "review" of citywide fees?

This seems to be an expensive loose end that I-Mayor Gloria neglected to tidy up in his vaunted brief stewardship of the city. And it also sounds to me like fee-free street-closings and block parties are a direct boon to the conflict-of-interest-business of Councilman Kevin Faulconer's wife.